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Federal Trade Commission v. Amazon.Com Inc.

United States District Court, W.D. Washington, Seattle

February 23, 2017

FEDERAL TRADE COMMISSION, Plaintiff,
v.
AMAZON.COM INC, Defendant.

          ORDER GRANTING AMAZON'S MOTION TO STAY MONETARY RELIEF

          JOHN C. COUGHENOUR, UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Defendant Amazon's motion to stay monetary relief pending appeal (Dkt. No. 292). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the motion for the reasons explained herein.

         I. BACKGROUND

         On April 26, 2016, the Court granted partial summary judgment for the Federal Trade Commission (FTC) and found Defendant Amazon liable for violations of Section 5 of the FTC Act. (Dkt. Nos. 224, 225, and 274-36.) On October 4, 2016, the Court held oral argument on the question of the proper amount and scope of monetary damages. (Dkt. No. 279.) On November 10, 2016, the Court ordered a notice-and-claims procedure as the appropriate monetary relief. (Dkt. No. 287.)

         On January 6, 2017, the FTC filed a notice of appeal, challenging the Court's order granting Amazon's motion for partial summary judgment and dismissing the FTC's claim for injunctive relief. (Dkt. No. 289.) Amazon then cross-appealed on the Section 5 liability issue. (Dkt. No. 291.) Amazon now moves this Court for a stay of the monetary relief pending appeal. (Dkt. No. 292.) The FTC argues that Amazon is not entitled to a stay. (Dkt. No. 294.) The FTC argues, in the alternative, if a stay is granted, only disbursement of refunds should be stayed or the Court should amend its order granting monetary relief to award a specific lump sum amount. (Id. at 8-11.)

         II. DISCUSSION

         A. Standard of Review

         When evaluating a motion for stay pending appeal, the Court evaluates similar factors that are employed in deciding whether to grant a preliminary injunction. Lopez v. Heckler, 713 F.2d 1432, 1435 (9th Cir. 1983). The Court considers “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Nken v. Holder, 556 U.S. 418, 434 (2009) (internal quotation marks omitted). The first two factors are the most important in the Court's analysis. Id. at 434.

         B. Likelihood of Success

         First, Amazon must prove a likelihood of success on the merits or that “serious legal questions are raised” in its appeal. Abassi v. INS, 143 F.3d 513, 514 (9th Cir. 1998); see also Leiva-Perez v. Holder, 640 F.3d 962, 967-968 (9th Cir. 2011) (“What is clear . . . is that to justify a stay, petitioners need not demonstrate that it is more likely than not that they will win on the merits.”). Amazon presents four different arguments to prove that there are serious legal questions raised in its appeal: (1) the unfairness standard used by this Court is incomplete; (2) Amazon's refund policy makes harm avoidable and constitutes a countervailing benefit; (3) Amazon lacked fair notice that unauthorized charges violate the law; and (4) a previous FTC Commissioner dissented from the FTC's issuance of an administrative complaint targeting Apple's in-app purchasing practices. (Dkt. No. 292 at 6-10.) The Court rejected these arguments in the summary judgment order and maintains its disagreement with Amazon's arguments, most specifically Amazon's argument that the Ninth Circuit has not considered the Section 5 unfairness standard. See, e.g., FTC v. Neovi, Inc., 604 F.3d 110, 1153 (9th Cir. 2010) (following the three-part statutory test for whether a practice is “unfair” under the FTC Act without embellishment). However, the Court concludes that there is a small amount of room for debate on the issues presented in Amazon's appeal. Therefore, this factor tips in Amazon's favor.

         C. Irreparable Harm

         Amazon must also prove that it will suffer irreparable harm if the Court denies this motion to stay. Irreparable harm exists when there are no adequate remedies at law. Latta v. Otter, 771 F.3d 496, 500 (9th Cir. 2014). Amazon argues that if the Ninth Circuit reverses this Court's decision, “Amazon will be unable to recoup the refunds provided to customers who submitted claims.” (Dkt. No. 292 at 5.) This assertion is uncontested by the FTC.

         The FTC counters, however, that even if Amazon could satisfy the irreparable injury factor, it is not entitled to a stay if it does not make a strong showing that it is likely to succeed on the merits. (Dkt. No. 294 at 7) (citing Nken, 556 U.S. at 427). However, this is an inaccurate statement of the law. The Supreme Court has said that a “strong showing” of likelihood of success, although important, is one factor to be considered and that a stay is not a matter of right, even if irreparable injury might otherwise result to the appellant. Id. at 426, 427. Therefore, a severe irreparable injury and small likelihood of success on the merits, when balanced with the other two factors, can still be the reasons to grant a motion to stay.

         The FTC also argues that the irreparable injury alleged is speculative because “there is simply no way to know how many refund claims Amazon will actually receive or what the dollar amount of those claims will be.” (Dkt. No. 294 at 7.) However, this argument is curious when the FTC previously, and adamantly, argued that the Court should award a lump sum monetary relief, instead of a notice-and-claims procedure, because the lump sum amount suggested by the FTC accurately reflected the injury caused by Amazon's unfair in-app purchase practices. (See generally Dkt. Nos. 258, 269-1.) Moreover, the FTC seems at least to acknowledge ...


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